Thai anti-government protesters in Bangkok surrendered yesterday, giving the harried Prime Minister some breathing space to try to fix the worsening economy.
"We have to stop because we need to look after the lives of our supporters," said Jatuporn Prompan, one of the leaders of the red-shirted protesters loyal to former premier Thaksin Shinawatra who still commands widespread loyalty among the rural poor.
The government extended the New Year's holiday for the rest of the week for "public safety" in case the red shirts regroup in Thaksin strongholds and come back to the capital, government spokesman Panitan Wattanayagorn told Reuters.
"Overall, I don't think this is the end of the story," said Danny Richards, senior economist at the Economist Intelligence Unit in London. "This crisis still has a long way to go.
"But in terms of this protest in itself, Abhisit has managed to remain in control, and I think you'd have to say he has avoided a major crisis of confidence in his government."
Police said arrest warrants have been issued for Mr Thaksin and 13 other pro-Thaksin leaders in the United Front for Democracy against Dictatorship (UDD) for violating a state of emergency, which forbids more than five people for political reasons.
Four of them were already in custody.
Thailand's intractable political divide broadly pits royalists, the military and the urban middle-class against the rural poor loyal to Mr Thaksin.
Standard & Poor's downgraded its local currency sovereign rating for Thailand yesterday and said political tension would remain high, whichever side was in power.
"We believe that investor confidence has been damaged significantly as a result of the latest developments while, in the near term, inbound tourism will also be affected negatively," said S&P credit analyst Kim Eng Tan.
Thai stocks look set to fall when they resume trading tomorrow after a long holiday scarred by political unrest, and the baht may also come under pressure due to the downgrade, investment analysts said.
Mr Abhisit was made to look foolish after the "red shirts" forced the cancellation of an Asian summit in the resort of Pattaya on Saturday, an event the prime minister had trumpeted as proof Thailand was returning to normal.
Protesters had besieged his office at Government House since March 26, demanding he resign and new elections be held.
But Mr Abhisit restored some of his lost credibility after the military quelled violent protests on Monday between red shirts and troops at a major junction in the capital without too much bloodshed.